Box CEO on growth, rivals and the inevitable IPO

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Updated 7:50 am, Sunday, October 7, 2012

Aaron Levie, CEO of Box, is seen at Box headquarters on Friday, September 28, 2012 in Los Altos, Calif.

Aaron Levie, CEO of Box, is seen at Box headquarters on Friday, September 28, 2012 in Los Altos, Calif.

Photo: Lea Suzuki, The Chronicle

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Aaron Levie walks through the Los Altos headquarters of Box, which the company is rapidly outgrowing. It has opened a London outpost and will have a San Francisco site late this year.

Aaron Levie walks through the Los Altos headquarters of Box, which the company is rapidly outgrowing. It has opened a London outpost and will have a San Francisco site late this year.

Photo: Lea Suzuki, The Chronicle

Image 3 of 3

Aaron Levie, CEO of Box, is seen at Box headquarters on Friday, September 28, 2012 in Los Altos, Calif.

Aaron Levie, CEO of Box, is seen at Box headquarters on Friday, September 28, 2012 in Los Altos, Calif.

Photo: Lea Suzuki, The Chronicle

Box CEO on growth, rivals and the inevitable IPO

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Late last month, during the closing hours of the third quarter, a series of Box employees stepped up to a pair of gongs and banged away, each strike representing a freshly closed deal.

It's a sound that rings out a lot these days on the top floor of the online storage company's Los Altos headquarters. Sales have tripled in the last year, as growing numbers of companies move their information from on-site servers to the Box cloud, alleviating the many headaches of dealing with data in the process.

Against all odds, the business-focused firm has become a hot startup in Silicon Valley, a bastion of consumer tech obsession - at least until the embarrassing stumbles of Facebook, Zynga and Groupon.

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Employee count has more than doubled from a year ago, prompting the 7-year-old company to open space in London this summer and lease a San Francisco satellite office that should open by the end of the year. This summer, Box closed a $125 million funding round that reportedly valued the company at $1.2 billion.

On Monday, the company will kick off its annual conference in San Francisco, BoxWorks 2012. It will host more than 1,200 people, triple last year's attendance.

Aaron Levie, the 27-year old chief executive officer and co-founder of Box, recently sat down with The Chronicle in a cramped conference room filled with bright, colorful chairs. Not to be outdone, the young CEO walked in wearing sneakers with pink laces, along with his usual jeans and sport jacket.

Levie has earned a reputation as quick-witted, rapid speaking and very often funny. All three were on display as he discussed the appeal of Box, growing competition in online storage and the likelihood of an initial public offering.

This interview has been edited for length and clarity.

Q:What's driving the growth at Box?

A: For the first time since the beginning of the cloud, the vast majority of enterprises are realizing they have to develop a strategy for how their applications are going to run, where they're going to run and what applications they're going to be using for the future.

They're moving into a very heterogeneous technology environment, using everything from Salesforce (online sales software) to various Google products to being a very iPad- and iPhone-driven environment.

In that world, you need a brand new way to manage your content. You're not going to be deploying the standard on-premises systems you were five or 10 years ago.

So basically you have this confluence of factors, with mobility, the cloud and the changing landscape. We're fortunate enough to be sitting at the center of much of that.

Q:At the same time, online storage has become an increasingly crowded space. There's Dropbox, Google Drive, Apple's iCloud, Microsoft's SkyDrive. Storage has long been a commodity in the hardware world, so how do you stand out in cloud storage?

A: Storage absolutely is a commodity. A gigabyte is a gigabyte, no matter where it is. What we basically realized in 2005, fairly early into doing this, was that it couldn't just be about storage.

The value we create is what happens on top of that storage; what's happening to that information that makes it so a file or a hundred files or 10 million files on Box is more powerful than on any other place you could put that data.

As you add more content into Box, Box gets smarter about your information. We can do much better things around analyzing that content and helping you discover more relevant information.

Your hard drive is a commodity because it's just connected to you. When you think about an organization that has 20,000 employees or 50,000, the question becomes: How do you enable that many people to share information and collaborate from anywhere? That is really where the vast majority of our intellectual property and investment in engineering goes.

Q:What can attendees expect to see and hear at BoxWorks this year?

A: There's going to be a new Box platform that will enable way better collaboration and improve the way people connect to it.

What we found from customers is they want their data to be pervasive across all the applications that they're using, so if you have a single customer contract, you don't have to reproduce it in five different environments. You want to extend it into all the other areas in which you work. That's a massive new thing we're going to be talking about a lot.

The super-high-level thing we're working on is, we want to let you get to your data from anywhere.

This will underscore everything we're doing. Ten or 15 years ago, everyone was trapped in the office. All your data was stuck in a desktop or laptop. Today, mobile phones and tablets are really unlocking how people are working, where they work from and how they can share information.

We're asking: What will the post-PC enterprise look like, when we're working within a very heterogeneous landscape, using lots of different kinds of devices and lots of different cloud applications? What am I going to need from my business information? How am I going to want to work on it and get to it from anywhere, from any device?

We'll be making a bunch of announcements around this.

Q:This summer, Box raised a $125 million funding round. How are you putting that money to work?

A: A lot of it is continuing the momentum in some of these key areas we've talked about, by making just huge investments in R&D and engineering.

If you think about what we're building, it's everything from storage technology to collaboration to security to search. So we have a lot of different efforts that we have to build up and scale up rapidly.

By the end of next year, we'll probably reach 100 people in Europe. I think you'll see us expand into certain parts of Asia next year, if I had to be presumptuous.

And then you're just going to see a lot of stuff around our platform expansion and moving up into large enterprises. We'll be working with systems integrators that can really take us into these very large information-technology environments and make sure that Box fits into those environments in a very successful and strategic way.

Q:As often happens with a late-stage funding announcement, there was a lot of speculation that you'll go public sometime next year. I thought we could go ahead and break some news today, and have you lay out the plans for us.

A: We are not going public via BoxWorks, that is the news we'll break.

But no, one of the reasons to raise money is to have more time from that kind of event. We have so much we want to get done right now as a private company. There are so many things in terms of expanding into other geographies and building out the infrastructure.

Q:But can you see whether an IPO is part of the game plan, short or midterm?

A: I'd say that it is certainly the most likely inevitable outcome if we look at what we're trying to build and where we're trying to go. But again, it's something we think about as an event on our road map, along the way to what we want to do.

But we're just far more excited about what we're building, as opposed to an IPO.

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